thoughts and insights about social and environmental responsibility and sustainability reporting

Monday, August 29, 2016

First Reports -Ten Trust Factors

It's almost Q4 and you know what that means. It's almost the start of the reporting season.

YAY!

In the final quarter of the year, many companies are starting to plan their next report, or even their first report. There is a certain seasonality to reporting, by and large: Q4 planning, Q1 preparing, Q2 publishing, Q3 recovering. Of course, not every company is on that cycle.. but about now is usually the calm before the storm.

As we anticipate the next reporting season, we can expect a flurry of fabulous new first-time Sustainability Reports that will be published in 2017. It's not that I am especially optimistic about the impact of the EU Directive that will require 6,000 companies who do not currently report to start thinking about what they will write in their Sustainability Reports for 2017. Each year brings a flurry of new reports, with or without the Directive. And that means that each year, more companies have thought just a little more about the impact they have on our lives and are taking the first steps to be held to account.

Let's face it. Reporting is a little bit of a risky business. Take for instance, Dollar Tree Inc., a Fortune 500 American chain of discount variety stores that sells items for $1 or less in 13,600 stores around the country. Dollar Tree just published its 2016 Sustainability Report . Full marks for effort but this 14-pager 7-minute read is a list of environmental and social practices with barely any meaningful performance data. Not surprising then, perhaps, that there has been some backlash.

In a press release published in PR Newswire, angry activists representing the Campaign for Healthier Solutions berate the company for not addressing their concerns relating to chemical toxicity in the company's products after laboratory testing has found "potentially dangerous levels of lead, phthalates, and other toxic chemicals" in Dollar Tree's products. Comparing the current report to prior reports, these stakeholders find that there is almost no difference. So, although the folks at Dollar Tree have taken some steps along the transparency journey, they still have to find the path of accountability. Reporting is risky. Arguably, the fact that Dollar Tree has made efforts to publish a Sustainability Report has added fuel to the frustration of stakeholders. But, in fact, the Campaign for Healthier Solutions is doing Dollar Tree a favor. It's creating pressure that will ultimately lead to a safer planet, a safer society and a stronger business. If Dollar Tree embraces its critics, and takes responsible action, next year's headline may well be: "Dollar Tree's Sustainability Report reflects significant progress." Reporting, whatever your motivation, even if it's just to tick a box, sooner or later becomes part of a greater whole relating to a company's role in society. Sooner or later, Dollar Tree will change. And it will benefit from that change.

So, even with some risk, reporting adds value and first-time reports hold a special significance for reporters, report users and me. I love first-timers. There is something about the special efforts necessary to deliver a first-time report and starting to flex those transparency muscles. I believe this starts to transform the internal conversation in any company, and eventually transforms the external dialogue too (as it has done at Dollar Tree Inc.). So many first-time decisions challenge any company that's reporting for the first time that it's a bit like navigating a minefield. And almost as risky.

As you all know by now, I generally tend to be a little critical when looking at reports so here's my upfront disclaimer. Every first report is a commendable venture into accountability and transparency and the start of what is hopefully a meaningful reporting journey for any company and its stakeholders. As a reporting consultant for hundreds of years now working with many companies, I can testify to the fact that no report is easy and every first report double-proves it. Before we go any further, I say: CONGRATS to ALL first-time reporters ever - you all deserve a triple scoop. Good luck to all those first-timers planning to break through the transparency barrier in 2017. (Remember, help is at hand- you don't need to go it alone :-)).

In looking at any report, including first-timers, it's important to consider that the overarching purpose of any Sustainability Report is to build trust. If it doesn't do that, heck, you're wasting your time. I've been taking a look at first-timers - it's always fun - to see how this is working. There are probably a thousand ways in which reports build trust, but, in order to help me apply a consistent approach when looking at first-timers from around the world, I selected ten basic aspects of a first-time Sustainability Report that, for me, help build trust. These aspects do not carry equal weighting and they are far from scientific. These elements contribute to building any report's TF (Trust Factor) in my personal and subjective view. In sharing my thoughts, as always, my goal is to encourage reporting, in the hope that first timers will become second and third timers. My intention is not to be overly critical, but in some cases, forgive me if I can't help myself!

Here are the ten TF(Trust Factor) elements I consider in my series of first-timer report reviews:

The CEO Statement: Must be meaningful, relevant and authentic, not just some generic any-company rhetoric about "how proud we are of what we have achieved but there is more to be done".

Material focus: Must state the most important sustainability impacts and provide relevant disclosures. Oh, and that doesn't mean a list of material topics somewhere at the beginning of the report, and no further reference to materiality. It means using materiality to frame the content of the report.

Adherence to GRI:Yes, a GRI compliant report gains a point in my book. While there are many fantastic and genuinely impressive non-GRI reports, using GRI implies for me a predisposition to align with the most widely-used global reporting framework that relies on general stakeholder expectations of rigor in reporting content and quality.

Transparency maturity: This means providing a critical mass of relevant sustainability performance data, not just declarations of approach and positions. No numbers, no good.

Challenges: No company has no challenges. Authentic reports discuss challenges.

Examples of practice: Yes, I believe case studies build trust. They also help make the report more interesting and reduce yawn-time.

Stakeholder voices:I think reports that contain direct opinions from stakeholders tend to show that the reporting company has good relationships, a collaborative culture and appreciates stakeholder involvement. Including stakeholder voices - and faces - bring a report to life.

Contact person:I like reports that provide a person to contact, not an anonymous email dump-box. If you are proud of your report, put your name on it.

Clarity of presentation:We have to be able to understand data and charts quickly and read the narrative with ease. Too much technobabble drives me crazy. If I have to pore over a chart for more than 35 seconds to understand what it's telling me, it's a bad chart, no matter how creative the designers have been.

Design and format friendliness:While design is not necessarily a trust-builder, good, clean, compatible design makes reading easier and shows the reporting company considers not only how to get the message across but how to get it through. Easy navigability is a plus. (I don't read eBook reports, so first-timer non-downloadable eBooks don't get my time.) I don't like online-only which ties me to the speed and reliability of my internet connection wherever I am in order to navigate. I love PDFs. When I download a PDF, I can read it quickly wherever and whenever I want, search, highlight and make notes. Online formats undoubtedly offer interactivity advantages, but for me, they slow me down.

In upcoming posts over the next few weeks, in the run-up to Q4, I will review first reports that were published over the past couple of years against my TF (Trust Factor) framework. Watch out for posts with a First -Time Trust Factor title.

Let me know if you have recently published a first report.
Or even better - let me know if you'd like some help in preparing your first report. I would totally love that.